A Duo of Deadlines

Feb 8, 2019   //   by Bruce Mason   //   Weekly Market Update  //  No Comments

If you are anything like me, you may be wondering where did January go?  Last time I looked at the calendar we were just wrapping up New Year’s.  Fortunately, January was a good month as far as the market is concerned.  This week a bit of uncertainty returned with official talk of a China trade deal seeming to diminish with each new talking point.  While this news put a damper on the market this week, it isn’t this deadline that will be next week’s story.  You’ll remember there is a deadline next Friday regarding immigration and border security.  Truthfully, little has been reported on these negotiations and it is hard to know if any progress has been made.  We will find out soon enough.

I know I’ve touched on earnings season the past couple weeks, but this week marks the mid-point with around 234 companies in the S&P 500 reporting results.  Collective earnings per share have grown 18% compared to the same period last year, just ahead of the 15.5% estimate for the entire reporting season.  71% of companies have also reported earnings that have beaten analysts’ estimates, a figure that is ahead of the long-term average of 64%.  While these numbers are indeed good, keep in mind that a good portion of the gains was due to last year’s tax reform.  The comparative gains will almost certainly be lower going forward.

Changing gears, we learned this week that Bill Gross has decided to retire.  The 74-year-old bond manager and one-time “bond king” has announced his retirement from Janus Henderson.  You may recall he co-founded PIMCO in 1971 and served as managing director and its chief investment officer until 2014 when he left under difficult circumstances.  He never really regained his mojo with his unconstrained bond fund underperforming its benchmark since his start with Janus in 2014.   It is a new chapter in his life and a sad one for those of us who have been around long enough to know him.

In other news, there were a few interesting company stories this week.  It seems IBM and McCormick have teamed up to bring artificial intelligence (AI) to food products.  They have formed an ongoing research collaboration using AI for flavor and food product development.  The AI will explore flavor combinations and predict new flavor combinations from millions of data points.  Another interesting story worth mentioning is that electric vehicles (EVs) weren’t particularly happy with the Polar Vortex last week.  The deep freeze exposed some of the limitations of EVs.  Owners of Tesla, Nissan, and Jaguar EVs reported a loss of range of as much as 30% amid the record-setting low temperatures.  Perhaps just a coincidence but Tesla reported it is acquiring Maxwell Technologies which specializes in ultracapacitors.  Manufacturers are aggressively seeking denser battery packs, with long operational life, and most importantly the ability to charge faster than currently available.  It seems progressive is being made along these lines.

While we’re on the subject of cars, Kelley Blue Book estimates the average car price in the U.S. rose 4.2% last year to $37,149 as the shift away from passenger cars continues.  The average transaction price for the various manufacturers are as follows: Honda $29,341, Fiat Chrysler $39,484, Ford $41,446, General Motors $40,664, Hyundai-Kia $25,116, Nissan $29,819, Subaru $29,727, Toyota $33,258, and Volkswagen $37,149.

For the story of the week, let’s turn to Millennials.  A story reported a few months back polled Millennials to discover which brands they love.  While not groundbreaking, it is sometimes nice to know what direction spending is going, not to mention the occasions when you must buy a millennial a birthday or Christmas gift.  The following are the top ten brands in order:

  1. Nike
  2. Apple
  3. Amazon
  4. Target
  5. Walmart
  6. Samsung
  7. Google
  8. Sony
  9. Jordan
  10. Adidas

Now you know.

February 8, 2019

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